T-Mobile's non-subsidy strategy stops the $20/month carrier scam

US consumers buy subsidized phones because they are cheaper up front, but then the carrier makes that money back in increased monthly fees. However, when the phone is paid off, those monthly fees don't change, and consumers are left paying extra for nothing.

My pal Rich Brome posted a great article today on something I never really thought much about. I have been with T-Mobile for over 10 years now, and it turns out that was probably the right move as they are the only ones pushing a non-subsidy strategy that is the best for consumers.

As Rich explains, people in the US primarily purchase subsidized phones because they don't want to pay the actual high price. For example, you can get an iPhone for $199 subsidized, or pay upwards of $650 without a subsidy. Some of us buy unsubsidized phones so that we can keep existing plan features or continue using the service without a contract extension. However, there is something a bit more concerning going on here that, turns out, affects my strategy and has me a bit ticked off.

If you pay full price or bring your own phone to one of the four major carriers, you are still paying the extra $20 or so per month subsidy fee that people who buy new phones every 20-24 months are paying. The carrier is not giving you a break because you bought your own phone, and is just pocketing this subsidy fee without providing anything additional to you.

T-Mobile is trying to change the game here, and after reading Rich's post and having my eyes opened to carrier practices, I am fully onboard with their strategy and plan to switch to their Value plan.

You can also go with one of the rising prepaid carrier options, such as Republic Wireless, to make sure you are paying for services you actually receive rather than just handing money over to carriers each month for no reason.

Update, 11.45am PT: Rich's article prompted me to check into options on T-Mobile. I have a very old grandfathered 3000-minute MyFaves plan with data on three of five phones that costs me about $208 per month. I talked with the customer service rep for a while and ended up switching to a Value plan with two phones getting unlimited talk and text while the other three have 500 minutes each. Four phones get data, mine also gets wi-fi hotspot, and I can add data (2GB plus throttled) for $10 whenever I want. The monthly total drops down to about $145, saving me about $65 per month with more voice minutes and data.

I did have to pay a $200 migration fee since I bought the Note II last fall as a subsidized phone (still works out to be a cheaper Note II than paying full price), but at a $65/month savings, that pays for itself in just over three months.

The great thing about these Value plans is that I am not paying anything extra for a phone subsidy. If I do decide that I want to buy the latest and greatest phone, I can do it with their no-interest payment plan for $20 per month over 20 months, with some up-front fee to offset the rest of the phone cost. This is the same fee other carriers charge you for an infinite time period, but T-Mobile does it just for the period to pay for the phone.